Of Crude Oil and Unrefined Governance

​Of Crude Oil and Unrefined Governance
The latest episode in the excitable news cycle – “Fake Oil” – is a development much deeper in its significance than the ‘bacchanal’ it has generated.
If this happened in almost any other company or country for that matter, it would have generated much less ‘light and heat’ and would have been dealt with in keeping with the norms and channels of good governance, corporate or political.
WHAT IS THE ISSUE?
An internal audit of a particular business process has revealed some questionable transactions.
This is the everyday stuff of corporate operations – not the questionable transactions, but, the regular investigation by Internal Audit since that function is a watchdog function.
In a well-designed and functioning corporate governance structure, the reports of the Internal Audit would be submitted to the appropriate Managerial Officers and to the Audit Committee of the Board and eventually to the full Board, if decision-making is necessary at that level.
This is not exclusive to private Corporations.
The standard must be the same for State Enterprises or Organisations. There are several examples of where it has been so.
In the instant case, the discrepancies (alleged to have occurred 2-3 months ago) were recently discovered. But, there is NO information, in light of the exposure of the audit report, about what has been done with it within the Corporate structure of Petrotrin, a company registered under the Companies Act.
Fertile ground has been created by this lack of information in the context of Corporate Governance.
BEYOND CORPORATE GOVERNANCE
Recent media reports provide comments from Energy Minister Khan and the Prime Minister on the present case. Both suggest that they “will decide” after the “due process takes its course”.
Why are those involved in the political directorate, beyond corporate governance, claiming some authority to decide company operational business?
Why did the Prime Minister take it upon himself to call his friend, the contractor involved, and discuss the matter to the point he dared to say to the media that the subject of this Report “has denied it in very firm terms” to him.
Petrotrin, is a State-Owned Company, the state is the shareholder on behalf of the people of Trinidad and Tobago.
If Petrotrin were a private company, would the shareholders get involved in this matter over which the Board and management have full authority to make decisions and act?
The Audit Report identifies an employee as playing a role in the questioned transactions. But, there is no word on whether the HR department has suspended him pending further investigation or done anything else.
This is quite different from the case of another Petrotrin worker, who was accused of and fired for allegedly collaborating with an external contractor in the theft of pipes from the same Catshill field some years ago.
The investigation was so badly done that in the case before the Industrial Court, the worker was found to be dismissed in a manner that was ‘harsh and oppressive and contrary to good industrial relations practice’ and ordered his reinstatement.
A few years ago, an employee of the Agricultural Bank was charged and convicted of larceny of hundreds of thousands of dollars following an Audit Report.
None of this is for those at the level of Political Governance, but, is within the province of Corporate Governance.
WHAT DOES THIS TELL US
This unfinished saga of ‘fake oil’ has once again demonstrated the decrepit state of our Governance, Corporate and Political.
According to media information, the Audit Report was submitted to the President of Petrotrin (the Chief Executive).
There is nary a word about next steps by the Management.
This appears to be a failure of Corporate Governance at the Management level.
The line Minister informed the Senate that the ‘final report’ of the ‘internal audit probe’ was “finalised and being forwarded” to him.
So, are we to believe that this recently-appointed Board (the second within a year or so) with a mandate to restructure the company and make it profitable has done nothing more than forward the Audit Report to the Minister.
What decisions did the Board make after ‘full deliberations’ that the Minister spoke of?
This appears to be a failure of Corporate Governance at the Board level.
When does the Board DECIDE anything in this matter?
Recently, a former Energy Minister even called on the Prime Minister to “mandate the Board of Petrotrin to immediately forward the report ……to the Director of Public Prosecutions (DPP) and the Commissioner of Police (CoP).”.
A Board that has full responsibility for the affairs of the company needs no other mandate, and particularly from the Head of the Political Directorate to act in the interest of the company and to refer appropriate matters to the appropriate authorities.
At the level of the Political Directorate, more Governance failure.
The Prime Minister inappropriately discussed the matter with a principal subject of the Audit Report, because he is his “friend”.
This focused attention on Political Interference and Conflict of Interest issues.
The Minister, who is the Chairman of the PNM, claimed not to know both subjects of the Audit Report, claiming he doesn’t know the meaning of “financier” in one case and somehow didn’t recall the individual was a party candidate in not one, but the two most recent General Elections.
This focused attention of the issue of the appropriateness of party officers being in the Cabinet.
This entire episode brings home in stark fashion the dire need for the establishment of functional and accountable systems and institutions of Governance in our state enterprise sector and in our political governance with appropriate responsibility and accountability functions.
 
Clyde Weatherhead
Trincity
September 17, 2017

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